Recorded in early 1981, it first rose to number one on the Billboard Hot 100 in America in November 1981 and stayed there for 10 weeks, until near the end of January 1982. In terms of chart placement, it was the most popular single of her career in the U.S., as well as her final number-one (to date). Billboard ranked it as the number one pop single of 1982 (since the chart year for 1982 actually began in November 1981), and it was also the most successful song on the Hot 100 during the 1980s in terms of the number of weeks spent at number one.[4] The guitar solo was performed by Steve Lukather.

The single, slightly edgier than she had been known for in the past (such as her songs from Grease and her country-pop ballad "I Honestly Love You"), proved to be immensely popular both in America and in the United Kingdom, despite the fact that the song was censored and even banned by some radio stations; due to its sexual content, for example the line: "There's nothing left to talk about unless it's horizontally", in spite of Newton-John's status as the reigning queen of soft-rock music at the time, "Physical" peaked at only number twenty-nine on the AC chart (its follow-up, the slightly softer-edged "Make a Move on Me," found more acceptance at AC radio and went to number six AC as well as number five pop). The song was a big dance hit, crossed over to the Billboard R&B chart peaking at #28 there, and spawned a music video.

In the United Kingdom the single was not nearly as massive a success as in America, but still became a big hit, reaching #7. It also certified Silver.[5]

The controversial music video that was released to promote the song featured Newton-John in a gym with well-built men in the last half. Some of the scenes have sexual subtext, such as the shower scene or when Olivia rubs herself on the men.

The video features Newton-John, dressed in a tight leotard, as trying to make several overweight men healthy. She repeatedly tries to make the men lose weight, but they fail comically and she leaves the room to take a shower. When the men work out on their own, they suddenly transform into muscular, attractive men. A stylistic shot shows one muscular man glancing at his overweight self in a mirror. Newton-John is shocked when she returns to this, and starts to flirt with them. Two of the men secretly go out, holding hands, implying they are gay. This surprises Olivia, as does the sight of two more of the men leaving with their arms around each other. Finally, she finds that the last of the overweight men is straight and they go off to play tennis together.

Billboard ranked the song at #6 on its All Time Top 100[6] and #1 on Top 50 Sexiest Songs Of All Time.[7][8]

The revamped bossa nova version of the song was released on the 2002 Olivia duet album (2) as a bonus track; this version replaces the original in latest tours of Newton-John. A Newton-John duet with Jane Lynch was displayed in the episode "Bad Reputation" of the television series Glee.

The instrumental version of the song featured in a 1984 advert for the Talbot Samba car on British television.[9]

In 2007, Swedish clothing company WeSC released an album of new covers of "Physical" by 12 different artists, including Cat5, Doomington, Booty Cologne featuring ADL, the Black Ghosts, Lisa Loud & Kriss Darang featuring Hollie Cook, Timbuktu & Chords, Caged Baby, Pink Pioneers, the Glimmers, Blonde from Fargo, and Sara Lumholdt (a former member of Swedish pop group A*Teens now going under the stage name "Sara Love"). The album was titled Let's Get Physical with WeSC.